Provide three reasons why an auditor presumes that there are potential risks of fraud relating to...

Provide three reasons why an auditor presumes that there are potential risks of fraud
relating to revenue recognition in entities. Make sure that you explain your reasons
clearly.

Expert Solution

An auditor presumes that there are potential risks of fraud relating to revenue recognition in entities. This is due to:

Overstatement of revenues

This may be due to premature revenue recognition or recording fictitious events. Revenue recognition is dependent on particular facts and circumstances relating to the revenues, there is a potential risk of material misstatement. Also, accounting principles and practices vary according to industries resulting in further chances of misstatement.

Inventory quantities

This relates to the misstatement due to fraud that affects inventory quantities. Physical inventory count may differ from reported inventory quantities. This risk is even more prevalent when the reporting period is near. For eg. a particular asset maybe highly prone to misstatement would be material to the financial statement

Management estimates

There is a potential for material misstatement due to the development of management estimates. Management's estimates affect a large number of accounts such as valuation of assets, acquisition estimates, accrued liabilities fir value of derivatives etc.

jeff jeffy answered 1 year ago

An experienced auditor knows the procedures associated with assessing fraud or other inherent risks. In today's...

An experienced auditor knows the procedures associated with assessing fraud or other inherent risks. In today's scandal-ridden financial environment, an auditor's ability to spot the trappings of potential hidden problems in an audited entity's internal control system is essential. Discuss and contrast the issues surrounding the implementation of a comprehensive internal control structure in a large corporation and in a small family-owned business with only six employees. Your discussion needs to consider the limitations of systems in both a large...

List three reasons why an experimentally measured reduction potential would not equal the theoretical reduction potential.

Provide three reasons with brief explanations as to why the inflation rate is such an important...

Provide three reasons with brief explanations as to why the inflation rate is such an important statistic in our economy.

Provide at least three reasons why companies are hesitant to adopt the intranet and for each...

Provide at least three reasons why companies are hesitant to adopt the intranet and for each reason describe how the company can best manage these issues

16. Name three ethical reasons why an auditor might not seek re-election or might resign, explaining...

16. Name three ethical reasons why an auditor might not seek re-election or might resign, explaining the nature of the problem and the reasoning behind the resignation

Fraud, Professional Ethics and Auditor Independence

Fraud, Professional Ethics and Auditor Independence a) When assessing a client’s integrity, the auditor will consider the client’s willingness to allow the auditor full access to information required to form an opinion and pay a fair amount for the work completed. Explain why. b) Mike is a very experienced auditor with unique expertise in the mining industry. As a result, Mike has been the lead audit partner for the audit at BKK Oil for the last seven years. Recently,...

what is the Ultramares doctrine? (discuss and elaborate) and provide three reasons, why you agree or...

what is the Ultramares doctrine? (discuss and elaborate) and provide three reasons, why you agree or disagree with the doctrine

Please provide and discuss three reasons why companies will issue restricted stock to employees in their...

Please provide and discuss three reasons why companies will issue restricted stock to employees in their stock compensation plans..

Professional auditing standards require auditors to consider “Fraud Risks”. There are three key conditions that are...

Professional auditing standards require auditors to consider “Fraud Risks”. There are three key conditions that are typically present when a financial fraud occurs. Please discuss the meaning of Fraud risks, the conditions, and examples for each of these conditions. Provide references to the applicable auditing standards that support your submission.

How are the potential risks involved in the process of the Samsung business venture? Provide Management...

How are the potential risks involved in the process of the Samsung business venture? Provide Management practices you will be implementing to minimise or eliminate the problems/issues you have or might have in the future. hi can you write 800 words plagiarism-free, thank you

Question